Feds sue sketchy Georgia company for mobile phone cramming

Here at Ars, we’ve been covering the deceptive and downright shady practice of “bill cramming” throughout the last few years. In this scheme, consumers are billed for services that they never asked for, likely ignored, and yet continue to be billed for. (Ars editor Nate Anderson detailed his own experience with cramming back in 2008.) It’s happening in the ISP industry, in the landline telephone industry, and increasingly in the mobile phone industry too.

On Tuesday, the Federal Trade Commission (FTC) filed its first civil suit against Wise Media, LLC, a Georgia company accused of consistently engaging in the practice.

“Defendants operate a scam in which they bill consumers for text message-based subscription services even though the consumers did not authorize any purchase of the services,” the FTC alleges in its legal complaint (PDF).

“Defendants’ purported services have included sending periodic text messages containing horoscope alerts, ‘flirting tips,’ ‘love tips,’ and similar kinds of information. Using the billing mechanisms of mobile phone companies, Defendants cause unauthorized charges for these services to be placed on consumers’ mobile phone bills, often with abbreviated and uninformative descriptions.”

Ars attempted to contact Wise Media through every phone number we could find, but we kept getting disconnected or receiving other error messages.

Wise Media, which records show is based in Atlanta, is the company behind HoroscopeGenie. A call to the company was fielded by Brian Buckley, who described himself as the chief operating officer. To get a sense of the place, the Haggler asked some basic questions, like how many people are employed at Wise Media, and how many SMS services does Wise Media provide?

That’s private, Mr. Buckley said.

Could he explain how Ms. Lindenmayer wound up paying for HoroscopeGenie?

No problem, he said. The company keeps careful records of who signs up for Wise Media products, and Mr. Buckley said he’d determine exactly when Ms. Lindenmayer became a HoroscopeGenie subscriber.

A day later, an e-mail arrived from “Compliance Team” at Wise Media.

“It is not our policy to share customer records,” it read in its entirety.

Well, how gallant. Wise Media, it turns out, doesn’t share much of anything. Including its address.

A class act

Wise Media is also involved in a California-based class-action lawsuit that was filed late last year. That case is set for a settlement hearing in early 2014. Michael Page, a San Francisco-based attorney, is defending Wise Media in this case. However, he told Ars that he is not representing Wise Media in the FTC case and does not know who is.

(Ars also reached one of the plaintiffs, Erik Kristianson of El Cerrito, CA, by phone on Wednesday morning. He declined to comment on the case.)

Court documents from that lawsuit allege that Kristianson received “an SMS text message from a five-digit number, 271-40. The text advertised a horoscope updates service (i.e., HoroscopeGenie), which offered three horoscope texts per week for a charge of $9.99 per month.)”

The complaint alleges that despite Kristianson's reply text stating that he did not want this service, he was nevertheless enrolled and charged $9.99 per month.

“We are very pleased that the FTC has filed suit against Wise Media, condemning the very same practices that we are challenging in our existing class action against Wise Media,” Jeffrey Rosenfeld, who represents the plaintiffs in the California suit, told Ars.

“Although the FTC has not named the aggregators who act as middlemen between Wise Media and the mobile phone carriers, as we have, we will continue to pursue our claims against Wise Media and its enablers, as well as other crammers we are currently investigating.”

Promoted Comments

As has been pointed out (repeatedly) by wiser minds than mine , the real issue here is the telco's who act as payment processors for concerns like this one without their (the concerns) providing any documentation whatsoever that the customer has consented.

Another great reason to go with a pre-paid carrier. You can't sign up for any service like this on most of them.

35 Reader Comments

As has been pointed out (repeatedly) by wiser minds than mine , the real issue here is the telco's who act as payment processors for concerns like this one without their (the concerns) providing any documentation whatsoever that the customer has consented.

As has been pointed out (repeatedly) by wiser minds than mine , the real issue here is the telco's who act as payment processors for concerns like this one without their (the concerns) providing any documentation whatsoever that the customer has consented.

If telcos want to go around acting like pseudo credit card companies then they need to step up and start offering disputed charge services. Otherwise, bugger off and leave it to the professionals[1].

[1] Yes I know, I bank with Chase, but if the target is hanging that low, the telcos have no excuse for not hitting it.

T-Mobile did this to me. They said under no condition would they reverse the charges so I asked to arbitrate and suddenly they reversed them. I was almost a little sorry they did because I was so interested in what their "proof" was that I signed up for this service (something I would never sign up for in a million years).

As has been pointed out (repeatedly) by wiser minds than mine , the real issue here is the telco's who act as payment processors for concerns like this one without their (the concerns) providing any documentation whatsoever that the customer has consented.

I was under the impression that the horrible system the telcos have in place is required by law. The law allowed customers to easily switch long distance carriers when the telcos had a near monopoly. I may be wrong, so I'd love someone with more knowledge to chime in.

As has been pointed out (repeatedly) by wiser minds than mine , the real issue here is the telco's who act as payment processors for concerns like this one without their (the concerns) providing any documentation whatsoever that the customer has consented.

Another great reason to go with a pre-paid carrier. You can't sign up for any service like this on most of them.

T-Mobile did this to me. They said under no condition would they reverse the charges so I asked to arbitrate and suddenly they reversed them. I was almost a little sorry they did because I was so interested in what their "proof" was that I signed up for this service (something I would never sign up for in a million years).

willdeans, when was that? I am in the process of moving from Verizon to T Mobile, largely because there is no contract requirement. I'd like to determine if Scannall's statement would apply to me.

What really made me sick is when I went to dispute the charges with the carrier (Sprint) and the CSR at the other end tried to make me feel like this was somehow my fault and that I outta work it out with these #^@%&^#@% scammers. Like a company that fraudulently put charges on my bill is going to work with me to remove them.

The carriers have too much financial interest in letting these situations go on. (Persistance pays off though, there's no way I'm putting money in the pocket of one of these scammers)

T-Mobile did this to me. They said under no condition would they reverse the charges so I asked to arbitrate and suddenly they reversed them. I was almost a little sorry they did because I was so interested in what their "proof" was that I signed up for this service (something I would never sign up for in a million years).

willdeans, when was that? I am in the process of moving from Verizon to T Mobile, largely because there is no contract requirement. I'd like to determine if Scannall's statement would apply to me.

I don't know about T-Mobile, but I am thinking that it would be possible to add services. When I was with AT&T long ago, one of my teenagers put a bunch of crap on my bill. Ugh. But I was able to set up my phone account with them so that no 'services' were allowed from that point on. The same may apply to T-Mobile

T-Mobile did this to me. They said under no condition would they reverse the charges so I asked to arbitrate and suddenly they reversed them. I was almost a little sorry they did because I was so interested in what their "proof" was that I signed up for this service (something I would never sign up for in a million years).

willdeans, when was that? I am in the process of moving from Verizon to T Mobile, largely because there is no contract requirement. I'd like to determine if Scannall's statement would apply to me.

In an ounce of prevention, you may contact your mobile service provider and request that they block all 3rd party billing and access request. The only downside, if any, is that any pre-existing legitimate arraignments you might have with a 3rd party service will stop. My provider (a top 3 provider) did this for me last year after I noticed a $9.99 charge on my bill from a similar scammer. We are all to wonder why this is a automatic opt-in when easily opted-out.

How is cramming not simple theft? Could (tens of) thousands of people all take the carriers (or the crammers) to court over this?

It isn't simple theft because there is a process to dispute it. The problem is that this process may place a high burden upon the customer with the upside often limited to the amount in dispute. Like the city which makes bogus tickets cheaper to pay than to fight the dispute process is broken. The customer needs to be refunded not only for the charge but also for legal fees and possibly for personal time expended (missed work, etc.) I blame the user for dealing with such companies but sometimes there really isn't a good choice as in the case of phone providers.

As has been pointed out (repeatedly) by wiser minds than mine , the real issue here is the telco's who act as payment processors for concerns like this one without their (the concerns) providing any documentation whatsoever that the customer has consented.

Another great reason to go with a pre-paid carrier. You can't sign up for any service like this on most of them.

That's all well and good but that's no real solution to the carriers turning a blind eye on these scams. Perhaps an FTC lawsuit against the telcos would do a better job at making them more accountable for unauthorized payment activity against consumer accounts. I refuse to accept a claim of "ignorance' on the telcos part. Until they (telcos) start taking steps to curb this kind of activity too, all we're doing is jumping from one lawsuit to the next as each new crammer emerges, without actually trying to solve the issue form all possible ends.

As has been pointed out (repeatedly) by wiser minds than mine , the real issue here is the telco's who act as payment processors for concerns like this one without their (the concerns) providing any documentation whatsoever that the customer has consented.

Another great reason to go with a pre-paid carrier. You can't sign up for any service like this on most of them.

That's not the point. Of course YOU could take all the necessary measures to avoid being scammed, but why does the system allows the scam to happen to begin with? Why is the burden on each individual customer (many of whom are busy people with lots of other useful stuff to do instead of watchdog-ing each and every service bill the receive)?

IOW, what is more efficient: millions of customers checking their bills to avoid being scammed, or a few companies stopping being accomplices of thieves?

That's not the point. Of course YOU could take all the necessary measures to avoid being scammed, but why does the system allows the scam to happen to begin with? Why is the burden on each individual customer (many of whom are busy people with lots of other useful stuff to do instead of watchdog-ing each and every service bill the receive)?

IOW, what is more efficient: millions of customers checking their bills to avoid being scammed, or a few companies stopping being accomplices of thieves?

Quote:

That's all well and good but that's no real solution to the carriers turning a blind eye on these scams. Perhaps an FTC lawsuit against the telcos would do a better job at making them more accountable for unauthorized payment activity against consumer accounts. I refuse to accept a claim of "ignorance' on the telcos part. Until they (telcos) start taking steps to curb this kind of activity too, all we're doing is jumping from one lawsuit to the next as each new crammer emerges, without actually trying to solve the issue form all possible ends.

You both have a valid point. I do think that one simple change would fix most of it. The current default is opt-out. If the FTC were to give them a nudge, or perhaps a hard shove to opt-in then most of the problem would be solved.

That's not the point. Of course YOU could take all the necessary measures to avoid being scammed, but why does the system allows the scam to happen to begin with? Why is the burden on each individual customer (many of whom are busy people with lots of other useful stuff to do instead of watchdog-ing each and every service bill the receive)?

IOW, what is more efficient: millions of customers checking their bills to avoid being scammed, or a few companies stopping being accomplices of thieves?

Quote:

That's all well and good but that's no real solution to the carriers turning a blind eye on these scams. Perhaps an FTC lawsuit against the telcos would do a better job at making them more accountable for unauthorized payment activity against consumer accounts. I refuse to accept a claim of "ignorance' on the telcos part. Until they (telcos) start taking steps to curb this kind of activity too, all we're doing is jumping from one lawsuit to the next as each new crammer emerges, without actually trying to solve the issue form all possible ends.

You both have a valid point. I do think that one simple change would fix most of it. The current default is opt-out. If the FTC were to give them a nudge, or perhaps a hard shove to opt-in then most of the problem would be solved.

Not the FTC (please). The FTC is why this sort of thing happens! Buyers need a true choice not a lineup of identical products. The FTC and friends are why buyers don't even read the contract. True choices cause companies to spend more on product and less on ads. If all products are the same more or less why spend all your time polishing your government prescribed turd when you can't effect much change? Government prescribed products are sold by ads NOT by product improvement.

That's not the point. Of course YOU could take all the necessary measures to avoid being scammed, but why does the system allows the scam to happen to begin with? Why is the burden on each individual customer (many of whom are busy people with lots of other useful stuff to do instead of watchdog-ing each and every service bill the receive)?

IOW, what is more efficient: millions of customers checking their bills to avoid being scammed, or a few companies stopping being accomplices of thieves?

Quote:

That's all well and good but that's no real solution to the carriers turning a blind eye on these scams. Perhaps an FTC lawsuit against the telcos would do a better job at making them more accountable for unauthorized payment activity against consumer accounts. I refuse to accept a claim of "ignorance' on the telcos part. Until they (telcos) start taking steps to curb this kind of activity too, all we're doing is jumping from one lawsuit to the next as each new crammer emerges, without actually trying to solve the issue form all possible ends.

You both have a valid point. I do think that one simple change would fix most of it. The current default is opt-out. If the FTC were to give them a nudge, or perhaps a hard shove to opt-in then most of the problem would be solved.

The carriers make so much money off this that there is no way any kind of non-mandatory nudge or shove is going to have an effect. This is one of those cases where the right tool for the nail is a hammer.

The saddest part about this story is that the FTC actually doing something to stop a crammer is a "story" at all. "NEWS FLASH: FTC actually gets off it's corporate-ass-covering ass and actually makes a first token, feeble effort to stop a completely indefensible and illegal practice that has enraged zillions of consumers forever and ever!"

Not the FTC (please). The FTC is why this sort of thing happens! Buyers need a true choice not a lineup of identical products. The FTC and friends are why buyers don't even read the contract. True choices cause companies to spend more on product and less on ads. If all products are the same more or less why spend all your time polishing your government prescribed turd when you can't effect much change? Government prescribed products are sold by ads NOT by product improvement.

I can't agree with this. Without govt intervention in cases like these, the corporations' "choice" to make more money will trump any "choice" their consumers may be offered.

That's not the point. Of course YOU could take all the necessary measures to avoid being scammed, but why does the system allows the scam to happen to begin with? Why is the burden on each individual customer (many of whom are busy people with lots of other useful stuff to do instead of watchdog-ing each and every service bill the receive)?

IOW, what is more efficient: millions of customers checking their bills to avoid being scammed, or a few companies stopping being accomplices of thieves?

Quote:

That's all well and good but that's no real solution to the carriers turning a blind eye on these scams. Perhaps an FTC lawsuit against the telcos would do a better job at making them more accountable for unauthorized payment activity against consumer accounts. I refuse to accept a claim of "ignorance' on the telcos part. Until they (telcos) start taking steps to curb this kind of activity too, all we're doing is jumping from one lawsuit to the next as each new crammer emerges, without actually trying to solve the issue form all possible ends.

You both have a valid point. I do think that one simple change would fix most of it. The current default is opt-out. If the FTC were to give them a nudge, or perhaps a hard shove to opt-in then most of the problem would be solved.

Not the FTC (please). The FTC is why this sort of thing happens! Buyers need a true choice not a lineup of identical products. The FTC and friends are why buyers don't even read the contract. True choices cause companies to spend more on product and less on ads. If all products are the same more or less why spend all your time polishing your government prescribed turd when you can't effect much change? Government prescribed products are sold by ads NOT by product improvement.

You misunderstand the role of the FTC. After you do, you'll want them to have more power, not less. We all want more competition in the marketplace, which is a different kettle of fish unrelated to WHAT the carriers all do.

For what it's worth, every time I receive a spam text I forward it to my provider. AT&T's number for that is to text it to 7726. It doesn't make them stop but at least I have a record of me immediately letting the carrier know that I know it's bullshit that at the very least shouldn't go against my plan's monthly texting allotment.

(I went from zero spam texts since texting became available years ago until last November, where it's several each month ... along with faked CallerID calls ...)

That's not the point. Of course YOU could take all the necessary measures to avoid being scammed, but why does the system allows the scam to happen to begin with? Why is the burden on each individual customer (many of whom are busy people with lots of other useful stuff to do instead of watchdog-ing each and every service bill the receive)?

IOW, what is more efficient: millions of customers checking their bills to avoid being scammed, or a few companies stopping being accomplices of thieves?

Quote:

That's all well and good but that's no real solution to the carriers turning a blind eye on these scams. Perhaps an FTC lawsuit against the telcos would do a better job at making them more accountable for unauthorized payment activity against consumer accounts. I refuse to accept a claim of "ignorance' on the telcos part. Until they (telcos) start taking steps to curb this kind of activity too, all we're doing is jumping from one lawsuit to the next as each new crammer emerges, without actually trying to solve the issue form all possible ends.

You both have a valid point. I do think that one simple change would fix most of it. The current default is opt-out. If the FTC were to give them a nudge, or perhaps a hard shove to opt-in then most of the problem would be solved.

Not the FTC (please). The FTC is why this sort of thing happens! Buyers need a true choice not a lineup of identical products. The FTC and friends are why buyers don't even read the contract. True choices cause companies to spend more on product and less on ads. If all products are the same more or less why spend all your time polishing your government prescribed turd when you can't effect much change? Government prescribed products are sold by ads NOT by product improvement.

You misunderstand the role of the FTC. After you do, you'll want them to have more power, not less. We all want more competition in the marketplace, which is a different kettle of fish unrelated to WHAT the carriers all do.

I am willing to learn but so far I am not sure I misunderstand. For instance "If the FTC were to give them a nudge, or perhaps a hard shove to opt-in then most of the problem would be solved." seems to limit choice and innovation through creation of a uniform product. This was the suggestion at hand which sparked my reply.

That's not the point. Of course YOU could take all the necessary measures to avoid being scammed, but why does the system allows the scam to happen to begin with? Why is the burden on each individual customer (many of whom are busy people with lots of other useful stuff to do instead of watchdog-ing each and every service bill the receive)?

IOW, what is more efficient: millions of customers checking their bills to avoid being scammed, or a few companies stopping being accomplices of thieves?

Quote:

That's all well and good but that's no real solution to the carriers turning a blind eye on these scams. Perhaps an FTC lawsuit against the telcos would do a better job at making them more accountable for unauthorized payment activity against consumer accounts. I refuse to accept a claim of "ignorance' on the telcos part. Until they (telcos) start taking steps to curb this kind of activity too, all we're doing is jumping from one lawsuit to the next as each new crammer emerges, without actually trying to solve the issue form all possible ends.

You both have a valid point. I do think that one simple change would fix most of it. The current default is opt-out. If the FTC were to give them a nudge, or perhaps a hard shove to opt-in then most of the problem would be solved.

Not the FTC (please). The FTC is why this sort of thing happens! Buyers need a true choice not a lineup of identical products. The FTC and friends are why buyers don't even read the contract. True choices cause companies to spend more on product and less on ads. If all products are the same more or less why spend all your time polishing your government prescribed turd when you can't effect much change? Government prescribed products are sold by ads NOT by product improvement.

You misunderstand the role of the FTC. After you do, you'll want them to have more power, not less. We all want more competition in the marketplace, which is a different kettle of fish unrelated to WHAT the carriers all do.

I am willing to learn but so far I am not sure I misunderstand. For instance "If the FTC were to give them a nudge, or perhaps a hard shove to opt-in then most of the problem would be solved." seems to limit choice and innovation through creation of a uniform product. This was the suggestion at hand which sparked my reply.

The example you cite is one where consumers would have to go out of their way to pay for a service, by agreeing with the service and explicitly setting it up. Like a normal transaction.

The present scenario assumes that when they receive an unsolicited text from someone they don't know and that reception constitutes an automatic transaction agreement is both contradictory to normal business practices and common sense.

There are times when the FTC's role is very much intended to limit choice and innovation such as this by regulating trade. The challenge will be for you to recognize when it's a great idea for businesses to be free to fuck you over and when it's better if they weren't permitted to offer that choice and innovation.

That's not the point. Of course YOU could take all the necessary measures to avoid being scammed, but why does the system allows the scam to happen to begin with? Why is the burden on each individual customer (many of whom are busy people with lots of other useful stuff to do instead of watchdog-ing each and every service bill the receive)?

IOW, what is more efficient: millions of customers checking their bills to avoid being scammed, or a few companies stopping being accomplices of thieves?

Quote:

That's all well and good but that's no real solution to the carriers turning a blind eye on these scams. Perhaps an FTC lawsuit against the telcos would do a better job at making them more accountable for unauthorized payment activity against consumer accounts. I refuse to accept a claim of "ignorance' on the telcos part. Until they (telcos) start taking steps to curb this kind of activity too, all we're doing is jumping from one lawsuit to the next as each new crammer emerges, without actually trying to solve the issue form all possible ends.

You both have a valid point. I do think that one simple change would fix most of it. The current default is opt-out. If the FTC were to give them a nudge, or perhaps a hard shove to opt-in then most of the problem would be solved.

Not the FTC (please). The FTC is why this sort of thing happens! Buyers need a true choice not a lineup of identical products. The FTC and friends are why buyers don't even read the contract. True choices cause companies to spend more on product and less on ads. If all products are the same more or less why spend all your time polishing your government prescribed turd when you can't effect much change? Government prescribed products are sold by ads NOT by product improvement.

You misunderstand the role of the FTC. After you do, you'll want them to have more power, not less. We all want more competition in the marketplace, which is a different kettle of fish unrelated to WHAT the carriers all do.

I am willing to learn but so far I am not sure I misunderstand. For instance "If the FTC were to give them a nudge, or perhaps a hard shove to opt-in then most of the problem would be solved." seems to limit choice and innovation through creation of a uniform product. This was the suggestion at hand which sparked my reply.

The example you cite is one where consumers would have to go out of their way to pay for a service, by agreeing with the service and explicitly setting it up. Like a normal transaction.

The present scenario assumes that when they receive an unsolicited text from someone they don't know and that reception constitutes an automatic transaction agreement is both contradictory to normal business practices and common sense.

There are times when the FTC's role is very much intended to limit choice and innovation such as this by regulating trade. The challenge will be for you to recognize when it's a great idea for businesses to be free to fuck you over and when it's better if they weren't permitted to offer that choice and innovation.

I WANT business to be able to "fuck me over" so long as I bend over for them by choice when I sign the contract because it lowers costs and increases freedom. It allows for innovation. Also it allows for all sorts of things people want but don't admit to like low base air fees with high per bag fees. Also it allows adults to enter into a contract with each other which more and more isn't allowed unless the government basically writes the contract.

T-Mobile did this to me. They said under no condition would they reverse the charges so I asked to arbitrate and suddenly they reversed them. I was almost a little sorry they did because I was so interested in what their "proof" was that I signed up for this service (something I would never sign up for in a million years).

willdeans, when was that? I am in the process of moving from Verizon to T Mobile, largely because there is no contract requirement. I'd like to determine if Scannall's statement would apply to me.

I have a T-Mob prepaid phone that was hit by a similar company with this crap. So, yes, T-Mob is just as likely to be hit by cramming as any other prepaid to my understanding and experience.

The time has long passed since people can consider larger companies to be 'their friend'. No, it is ultimately an adversarial relationship where the company wants to deliver the least but charge the most, while for the customer it is vice-versa. So don't expect any large company to have the customers' interests at heart.

--------

Wherever there is an opportunity for some other little shit like crammers, spammers, telemarketers, etc. to make a buck they will find a way, legal or otherwise. There are people sitting around at home dreaming up schemes for fast, undeserved riches, and there always have been. With globally-accessible networking and other resources many of them can act on their impulses. So while cramming happens to be today's source of ire, there are a thousand other get-rich-quick artists waiting for the next loophole to be exploited. They are weeds, vermin, viruses looking for a fresh host, and unless you live in a sealed compound you are exposed to their devices. This is the downside to human 'civilization'.

Sorry to be so pessimistic, but these stories will only get worse over time. There are seven billion people involved in this game, and that number is only increasing.

Thats why I use random debit collection phone numbers when i sign up for stuff online. Because if they cannot reach me via my throwaway email address or through the service they are providing they dont really need to talk to me.

This happened to me recently and I have AT&T, they reversed all the charges and were super apologetic about it. They put a service in place that prevents my number from being signed up for random charges again. Super angering that these scammers can do this! I was lucky I happened to look at my bill because I (and probably a lot of others) don't usually look at my phone bill very carefully.

Can't believe I'm sticking up for a bloodsucking cell phone company, but AT&T really was pleasant and helpful.